Chapter 13 Corporations

MULTIPLE CHOICE

1. Washington Financial Corporation reacquires 10,000 shares of its $5 par common stock for $9 per share. The journal entry will include a

1. debit to the Common Stock account for $90,000.

b. credit to the Common Stock account for $90,000.

3. credit to the Paid-In Capital in Excess of ParCommon account for $40,000.
4. debit to the Treasury Stock account for $90,000

2. The two basic types of capital stock are

1. cumulative preferred stock and participating preferred stock.
2. cumulative common stock and participating common stock.
3. common stock and preferred stock.
4. participating common stock and participating preferred stock.

TRUE / FALSE

3. A corporation has a separate legal existence apart from its owners. True or False
4. Generally, it is harder for a corporation to raise capital than for a sole proprietorship or a partnership. True or False
5. An advantage of a corporation over a sole proprietorship or a partnership is the ease of transferring ownership. True or False